February KRX Steel & Bank Index rose by 10%… POSCO 14.66%, DGB Financial Group 10.99% ↑
Steel products are being shipped from Pier 3 of the Pohang Works. Daily newspaper DB
The stock prices of major steel and financial sectors in Daegu Gyeongbuk, such as POSCO and DGB Financial Group, showed strong performance amid rising interest rates, expectations for an economic recovery, and signs of inflation.
According to the Korea Exchange on the 28th, in the domestic stock market in February, steel stocks and banking stocks, which had not been seen in the light of growth stocks such as technology stocks, were remarkable in the domestic stock market in February.
As US Treasury yields rise, stocks that benefit from rising interest rates and inflation are emerging as the leading stocks.
Among the KRX sector indices in February, the KRX steel index rose the most.
The KRX Steel Index consists of 10 domestic steel industry stocks. It rose 9.87% from 1,385.70 on the 1st of this month to 1,522.49 on the 26th. Compared to the KOSPI increase rate (1.23%), which continued a sideways market during the same period, the uptrend was much stronger.
In particular, POSCO’s share price rose 14.66% in February, with a market capitalization of 56.6% of the KRX steel index.
This is attributed to the recent inflation and expectations of rising interest rates. Steel stocks are considered traditional economically sensitive stocks (cyclical). At the end of last year, as global manufacturing production increased again, the prices of raw materials such as copper and crude oil soared, and POSCO’s stock price also drew an upward curve.
The KRX Bank Index also rose 9.50% from 572.37 on the 1st of this month to 626.73 on the 26th. It is an index composed of eight financial holdings and banking stocks.
Among the stocks included in the index, DGB Financial Group jumped 10.99% in a month.
In addition, all stocks such as Hana Financial Group, JB Financial Group, Woori Financial Group, KB Financial Group, Shinhan Group, BNK Financial Group, and IBK rose 6-13%.
Banking is one of the leading industries that benefit from rising interest rates. This is because if interest rates rise, the net interest margin (NIM) increases, leading to improved earnings. Banks have exceeded market returns in all periods of rising interest rates except during the past financial crisis.
On the contrary, growth stocks that had been in the spotlight at the beginning of the year did not stand out in February.
Growth stocks are stocks that attract attention for future performance rather than current one. Future performance is converted to the current corporate value through a discount and reflected in the stock price. The lower the interest rate, the lower the discount rate, so the growth potential is evaluated more strongly, whereas the higher the interest rate, the less the growth potential is evaluated.
The securities industry predicted that as the stock market volatility increased due to expectations and burdens of rising interest rates, differentiation by industry could continue for the time being.
An official from Shinhan Investment said, “We believe that the stock price adjustment period will be prolonged than expected, and the differentiation will deepen by industry. In the process of restoring the stock market, rather than leading to economically sensitive stocks, earnings momentum is secured or the underlying conditions (fundamental) are solid. It is expected that the stock will be diversified to areas where the stock price has been excessively adjusted,” he said.